Tax free yield equivalent
[DOC File]FEDERAL INCOME TAX ISSUES RELATED TO
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Long-term risk-free government bonds were yielding 8.7 percent at that time. ... zero coupon bond with a face value of $1,000 and a yield to maturity of 6 percent. Your tax rate is 30 percent. How much in taxes will you have to pay on the bond the first year that you hold it? a. $ 11.97 ... This is equivalent to an effective annual rate of 9 ...
Tax-Equivalent Yield
Capital losses are tax deductible up to $3,000 or to offset capital gains . Equivalent pre-tax yield vs. after tax return. Equivalent pre-tax yield = tax-free return / (1 – T) After tax return = before tax return (1 – T) Example: suppose your marginal tax rate is 28%. Would you prefer to earn a 6% taxable return or 4% tax-free return?
[DOC File]Chapters 1&2 - Investments, Investment Markets, and ...
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The annualized bond equivalent yield to maturity is therefore 4 × 2= 8%. c. Set PV = (-)1100 and compute the interest rate to find that YTM = 3.592%. The annualized bond equivalent yield to maturity is therefore 3.592 × 2 = 7.184%.
CHAPTER 1
Which one of the following marginal tax brackets is the lowest bracket at which it would make sense for an investor to choose the tax-free bond over the taxable bond? At the 28% marginal bracket, the tax-equivalent yield is 7.22%; at the 35% marginal bracket, the tax-equivalent yield is …
[DOC File]FIN 32 - Argosy University
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Municipal bonds: tax-exempt bonds issued by state and local governments. Equivalent taxable yield: r = rm /(1 – t) After tax return: rm = r*(1 – t) Example: suppose your marginal tax rate is 28%. Would you prefer to earn a 6% taxable return or 4% tax-free yield? What is the equivalent taxable yield of the 4% tax-free yield?
[DOC File]Chapter 1 -- An Introduction To Financial Management
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tarag 1>2 bgðaj equivalent yield cMeBaHTinñpl municipal CaeRcIn nigGRtaBn§ Thus, the equivalent taxable yield is simply the tax-free rate divided by (1 – t). Table 1.2 present equivalent yields for several municipal yields and tax rates. Table 1.2 . Equivalent Taxable Yield Corresponding
[DOC File]CHAPTER 7
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Pill, Inc. uses straight-line depreciation. The firm faces a corporate tax rate of 34 percent and believes that the appropriate real discount rate is 13 percent. Which pain reliever should the firm produce? Equivalent Annual Cost and Replacement with Unequal Lives. 7.22 A machine with a 4-year life is purchased for $12,000.
[DOCX File]Minutes of the meeting : Accreditation of inter-dealer ...
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V. TAX-FREE RESTRUCTURINGS INVOLVING INSOLVENT COMPANIES 43. A. Tax Consequences of Tax-Free Reorganization 43. 1. Tax Consequences to the Debtor 43 ... For variable rate debt instruments, the annual yield is the annual yield of the equivalent fixed rate debt instrument, constructed based on the terms of the instrument as of the date of the ...
[DOC File]Chapter II:
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Corporate bond because the after tax yield is 6.25%. Corporate bond because the after tax yield is 4.5%. Municipal bond because the equivalent taxable yield is 6.3%. Municipal bond because the equivalent taxable yield is 6.6%. You will be indifferent between the two because the after tax yields are the same. CHAPTER 3. ANSWERS TO PROBLEMS
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